Category Archives: Retirement Plan

The Bipartisan Budget Act of 2015, which the President signed on November 2, 2015, contains multiple changes to payment strategies that many people utilized in determining when and how they would collect their Social Security retirement benefits. These changes eliminate "unintended loopholes" which ultimately financially benefited many claimants, and will particularly affect those who turn 62 years of age after 2015.

The first major change will be the elimination of double claiming. Many married couples—aged 66 years or older—have had the option of first claiming spousal payments (if the spouse was a higher earner) and then are able to switch to their own benefit amounts, which are now higher because they delayed in claiming. The longer one waits to claim his or her Social Security benefits, the higher monthly benefit amount will be.

For example, a wife may file for spousal benefit at age 62. When she turns 70, she then switches to her own retirement benefit, which has increased significantly from what her benefit amount would have been if she had claimed it at age 62. However, with the new changes, a person will need to choose one option or the other and will not be able to make changes to that choice later on. According to one analysis, there is a potential savings to the Social Security fund of $10 billion annually by eliminating this option.

Currently, if a person claims his or her Social Security benefit, but then suspends it, any dependent entitled to benefits would still receive those payments. Yet if the person is still working and wishes to continue to accrue retirement benefits, as well as receive the delayed benefit amount which will be significantly higher, he or she utilizes the file and suspend option, but his or her spouse continues to receive a monthly benefit check.

The Act removes that option. If a person suspends his or her benefits, dependent payments also stop and will not begin again until the benefit is activated again. This change will become effective in May of this year.

Changes to benefit and tax laws can be confusing to keep track of and understand how they affect your retirement plans, which is why it is important to consult with an experienced DuPage County estate planning attorney. Please call Stock, Carlson, Oldfield & McGrath LLC at 630-665-2500 to schedule your consultation today.

When it comes to investing your money, do you know what warnings to watch for that could be indicators of fraudulent activity? A recent study reveals that many seasoned investors may not be aware of the signs that could spell financial loss—possibly even disaster—for an unsuspecting investor.

The study, titled "Understanding Investor Perceptions of Financial Statement Fraud and Their Use of Red Flags: Evidence from the Field," was conducted by researchers from George Mason University, North Carolina State University, the University of Cincinnati, and the University of Virginia. A grant for the study was provided by Financial Industry Regulatory Authority (FINRA) Investor Education Foundation.

Surveys were given to 194 participants from 38 different states across the country. The gender of participants was split evenly between men and women, with the average age of between 40 and 49 years old. The average household income of study participants was between $60,000 and $90,000.

Each of these participants were nonprofessional investors; however, each also had a significant amount of experience in investing. In order to participate, each investor must have been involved with trading company stocks with the prior year, as well as reveal to researchers what the returns on their financial portfolios had been for the prior 12 months. The majority of participants had been involved in investing for approximately 10 years.

When it comes to protecting their investments and watching for fraud, survey participants tended to focus more on outside sources to detect fraudulent activity as opposed to a company's internal "sources." Participants cited activity such as litigation with which the company is involved, Securities and Exchange Commission (SEC) investigations, external auditors, and independent analysts as the gauge of whether or not a company presents a solid investment.

They admitted to not really paying attention to factors which are often key in detecting fraud, over outside sources, such as how big the company is and how long it has been in business, how much outside financing has the company borrowed, and management structure.

Another key red flag is often ignored—an unusual or sudden revenue spike. Instead, investors rely more on whether or not the SEC is scrutinizing the company. At this point, it is often too late and investors may take a large financial hit.

Working with experienced financial professionals can help ensure that your investments are protected. Moreover, it is additionally important have a solid estate plan in place for your family's financial future. If you have questions regarding the estate planning process please contact an experienced DuPage County estate planning attorney today to discuss what type of options will work best for your financial situation.

The U.S. Census Bureau estimates that as the baby boomer generationages into retirement, the age 65-and-older population will grow over 50 percent over the next 15 years. However, according to a new report recently released by the U.S. Government Accountability Office (GAO), a good majority of that population will not have the financial resources needed for retirement.

The GAO used data from the 2013 Survey of Consumer Finances, a survey sponsored by the Federal Reserve Board and the Department of the Treasury, to compile their report.

Per the GAO report, more than half of Americans aged 55 years or older do not have any type of retirement savings account, such as a 401(k) or Individual Retirement Accounts (IRA). Approximately 20 percent do have some type of pension which they will be able to draw from during retirement; however, another 30 percent will be left without retirement savings or pension.

For those people with retirement savings accounts, the median amounts of those accounts were $104,000 for people who were under 65 years of age. For those over 65, the median amount was $148,000.

The GAO report points out that pension plans are not as beneficial as they were for previous generations. For example, in 1975, the majority of workers had jobs which offered pension plans providing a lifetime defined benefit. A defined benefit (DB) amount is one that is based on an employee's years of service and their final salary. Over the years, lifetime defined benefit pension plans have been replaced by defined contribution (DC) plans, such as IRAs and 401(k) plans. And today, twice as many workers only have access to DC plans compared to the number of employees who have the benefit of DB plans.

The GAO discovered that approximately 40 percent of older Americans between the ages of 65 and 74 depend on their Social Security benefit for the majority of their household income. However, for those senior citizens who are 75 and older, that percentage shoots up to 61 percent. Currently, the average monthly Social Security benefit check is $1,287.00.

As this report demonstrates, it is essential for people to have a solid estate plan in place to ensure financial security when they retire. Contact an experiencedDuPage County estate planning attorney today for more details.